State energy regulators to consider reliability standards

The next time Ana Ferguson and her husband lose power for an extended period, they will be prepared. The Pikesville couple bought a generator after five nights without electricity in the aftermath of Hurricane Irene.

"We had to do it because we can't rely on BGE to put the lights on and keep the lights on," Ferguson said.

While Baltimore Gas and Electric Co. tookthe brunt of criticism from customers and public officials for its pace of power restoration after the late-August storm, other utilities around the state also have come under fire in recent years for poor customer service, frequent outages and other reliability concerns.

Pepco, the utility that serves 778,000 customers in Montgomery and Prince George's counties and the District of Columbia, received intense scrutiny from public officials and regulators about its response to the back-to-back snowstorms of February 2010.

Last month, the staff of the Maryland Public Service Commission, the state's energy regulator, released a long-awaited proposal for reliability standards for utilities.

The proposed standards would reduce the average length of outages statewide by 90 minutes and the frequency of outages by 24 percent by the end of 2015. They also would set benchmarks for tree trimming and telephone call response times, as well as deadlines for restoring power during normal and inclement weather.

The PSC would have the authority to impose fines if utilities fail to meet the standards. Any penalties incurred by utilities could not be passed on to ratepayers.

BGE and other utilities have raised concerns about the proposed regulations' impact on their operations and cautioned that the standards could cause consumers' bills to rise.

"We're supportive of anything that improves reliability," said A. Christopher Burton, BGE's senior vice president for gas and electric operations and planning. But "we believe it needs to be balanced and, if not, it runs the risk of increasing costs for customers."

Under the proposed regulations, utilities would be required to restore service within eight hours to at least 92 percent of customers during normal conditions. When a storm knocks out power to less than 50 percent of customers, utilities would be required to restore electricity to at least 95 percent of them within 50 hours — a measure that BGE, the state's largest utility, says would disproportionately affect the company.

During major storms in which more than 50 percent of customers are affected, utilities would have to restore power as quickly and safely as possible.

BGE said the cost of implementing the proposed standards would be significant, estimating that it could cost at least $100 million just to meet the standards related to outage duration and frequency.

The proposed regulations also aim to improve utilities' customer service, tree-trimming and other maintenance efforts. Utilities would have to answer 75 percent of customer calls within 30 seconds. In some cases, utilities would be required to clear all overhanging limbs above power lines.

The proposed reliability standards come after seven months of discussions among various stakeholders, including power companies, consumer advocates and local government groups.

State lawmakers passed the Maryland Electricity Service Quality and Reliability Act this year, which called for the Public Service Commission to establish the standards by July. The commission is scheduled to consider the proposed regulations Dec. 8.

John Kelly, deputy director of the Galvin Electricity Initiative, who testified in support of the new law, called the proposed regulations a set of "best practices" that appear to go beyond standards in other states.

The Maryland Office of People's Counsel, which represents residential customers on utility matters, is also concerned about balancing reliability with affordable electricity.

"I don't want people to get the impression that an increase in expenses related to reliability standards will automatically lead to an increase in rates," said Paula Carmody, the people's counsel, noting that rate increases would have to be approved by the Public Service Commission.

Hank Greenberg, state director of AARP Maryland, said consumers should not be expected to pay for better service. "What's really important is that the utilities have to spend their money wisely," said Greenberg, whose office filed comments on the proposed standards.

The advocacy group for those over age 50 urges more accountability for utilities and enforcement beyond the commission's authority to impose fines. AARP, along with the Montgomery County Office of Consumer Protection, wants some form of consumer compensation if a utility's reliability deteriorates markedly.

The proposed regulations spell out specific benchmarks for yearly outage duration and frequency for each utility, from 2012 to 2015, but would allow utilities some leeway in meeting the standards.

Under the proposal, BGE's average annual outage duration benchmark for 2015 would be 3.44 hours, down from 4.24 hours in 2012 and 4.52 hours in 2010. In practice, this is the amount of time a customer would be without power over the course of a year. Pepco's annual outage duration in 2015 would be 2.35 hours, according to the proposed standards.

The Public Service Commission would set reliability standards for future years.

The People's Counsel has expressed concern over whether the proposed reliability standards for 2012-2015 are appropriate because the costs to achieve those targets are not clear. It is recommending that the PSC establish baseline standards for each utility and, after two years, evaluate the impact and cost-effectiveness of the proposed regulations to determine whether the outage duration and frequency targets should be adjusted.

"We do want and fully support setting standards," Carmody said. "We are in a position where we don't have what we consider to be reliable cost information, and we need this in order to be able to do a full evaluation of what the standards should be for individual companies."

BGE and Pepco raised concerns about the methodology used to determine outage duration and frequency standards. The state determines duration and frequency performance based on most outages — but not those caused by major storms, in which more than 100,000 customers lose power and restoration takes longer than 24 hours.

BGE's Burton said the utility would prefer a method that better accountsfor weather variability. He said BGE has experienced 50 days of significant bad weather this year, while the average over the past 10 years has been 30 to 35 days.

"I look at [the weather pattern] and say, that's not reflective of the performance of the system," he said. "That's reflective of the severity of the weather."

Utilities are now required to submit a report detailing their response to major storms that cause more than 100,000 customers to lose power. Hurricane Irene, for instance, knocked out electricity to 756,000 of BGE's 1.2 million customers, some of whom were without power for eight days.

Ferguson, the BGE customer who bought a generator, said the prolonged outage after Irene was like a "bad dream." The Fergusons' young son, who has asthma, had to stay with a relative for three days because his nebulizer runs on electricity.

Ferguson, a real estate agent, spent time at a Panera Bread outlet in the days after the storm so she could continue to work. She said she supports the proposed regulations to improve reliability but is against any notion of rate increases.

"If they're not taking care of the customer, who are they taking care of?" she asked. "I spend a considerable amount for BGE."

•Each utility would have to meet specific yearly standards on outage duration and frequency benchmarks, which are spelled out from 2012 to 2015. The Public Service Commission would establish performance metrics from 2016 onward.

•Utilities would have to restore service within eight hours to at least 92 percent of customers during normal conditions.

•Utilities would have to restore power within 50 hours to at least 95 percent of customers during major storms in which up to 50 percent of customers experience outages.

•Utilities would have to restore power as quickly and safely as possible during major storms in which more than 50 percent of customers are without power.

•Utilities' customer service centers would have to answer at least 75 percent of customer calls within 30 seconds.

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